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Balance sheet improvement continues




Today the Fed released its Q2/12 estimate of households' balance sheets. Although net worth slipped by $322 billion for the quarter, this was entirely due to the decline in the stock market. The rebound in equities since June has more than made up for the second quarter losses, so net worth today is almost certainly at a new post-recession high and closing in rapidly on pre-recession levels. Here's one surprising development: according to the Fed's estimates, the value of households' real estate holdings is no longer declining and in fact rose almost $800 billion in the first half of this year, while debt burdens are going nowhere. Altogether, this is a sustainable recovery, even though it is still painfully slow.

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